Fitch Ratings Comments On UICI's Proposed Sale

Business Wire, Oct 30, 2003

Business Editors

NEW YORK--(BUSINESS WIRE)--Oct. 30, 2003

Fitch Ratings positively views UICI's announcement that it has signed a definitive agreement to sell its wholly owned subsidiary, Academic Management Services, Inc. (AMS) (including AMS's loan origination, tuition payment plan and loan servicing businesses, as well as a $1.4 billion student loan portfolio) to SLM Corp, commonly known as Sallie Mae. Fitch believes that the transaction will enable UICI to focus on its core life and health operations. AMS originates, funds, and services primarily federally guaranteed student loans. As part of the transaction, Sallie Mae has agreed to assume responsibility for liquidating and terminating AMS' remaining special purpose financing facilities. The transaction is expected to close in November.

The insurer financial strength ratings for UICI's principal insurance subsidiaries, The MEGA Life and Health Insurance Company (MEGA) and Mid-West National Life Insurance Company of Tennessee (Mid-West) remain on Rating Watch Negative. Fitch originally placed the insurer financial strength ratings on Rating Watch Negative on July 30, 2003, related to problems uncovered in July at three of AMS' seven special financing subsidiaries. Deficiencies included a shortfall in collateral and type of loans permitted under such securitizations and potential deficiencies in reporting requirements under all seven of the special financing subsidiaries.

While Fitch views the insurance companies as strong on a 'standalone' basis, supported by good earnings and solid capital position, the uncertainty regarding the ultimate work out with the interested parties had an adverse effect on the insurance company ratings.

Fitch will closely monitor the progress of the recent announcement. When UICI successfully closes on the transaction with Sallie Mae and resolves any additional lingering issues at AMS, Fitch would expect to affirm the ratings and revise the Rating Outlook to Stable.

Entity/Issue Type                Rating/Outlook

The Mega Life Insurance Company
--Insurer financial strength     'A'/ Rating Watch Negative

Midwest National Life Insurance Company of Tennessee
--Insurer financial strength     'A'/ Rating Watch Negative